EUROPEAN SHARES
European benchmarks fell significantly lower on Wednesday, extending losses registered in Asia as investors take some profits out amid rising uncertainty.
The bearish spark on stocks and bonds occurred at the end of the US trading session yesterday when the Fitch ratings agency downgraded the US sovereign credit grade from AAA to AA+.
This move was triggered by the swelling budget deficit in Washington, which has raised concerns about rising debt levels and their potential impact on the overall economy. The downgrade occurred only a few weeks after the suspension of the debt ceiling in the US.
While this news is not perceived as a game changer in the financial markets, it is seen as significant enough to become a short-term bearish catalyst, inducing investors to take some profits out, especially following new all-time highs on European markets.
Across the EU benchmarks, most sectors are trading lower, with healthcare and tech shares showing the weakest performances.
The STOXX-50 is challenging its short-term bullish trendline, over the 50% Fibonacci retracement at 4,350.0pts, where a break-out could lead the market further down towards 4,310.0pts and 4,260.0pts by extension.
Pierre Veyret– Technical analyst, ActivTrades
Source:ActivTrader
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